This month has probably seen the biggest contraction of lending appetite of the high street banks since 2008. A mass withdrawal

from

interest-only has provided a new headline almost on a daily basis and it appears that interest-only has gone the same way as self-cert. A new terminology has also crept into the mortgage mar- ket. “Mortgage Prisoner” is the name for people trapped in their mortgage due to the tightening of credit policy. Many say that this drastic change in the mortgage land- scape has been caused by the Mortgage Market Review but the reality is that a chronic lack of funding coupled with increased capital adequacy requirements has caused the major lenders to retreat. In the first half of 2011 the funding problem seemed to be getting better but the problems in the eurozone all but closed the capital mar- kets in the second half of the year and sadly things have not improved. In my opinion there is a reasonable chance that gross lending will be lower than last year so it is important that mortgage bro- kers have a strategy in place to ensure their business con- tinues to thrive. If gross lending continues

to contract it is highly likely that lenders will favour their direct branch lending opera- tions, so my advice to brokers

is to seek out opportunities that are aligned with the bro- ker market. Near prime is one such opportunity, as not only is the number of people who do not fit high street lend- ers’ criteria growing, it is also highly unlikely that this type of lending will be transacted in a branch network.

“The days of a trained monkey being able to make money as a broker have gone” The broker market is go-

ing full circle and is starting to look like it did back in the early 90s when brokers did not get proc fees for vanilla cases and tended to focus on the specialist areas of the market. This need not be a bad thing as the number of brokers has dropped at the same time as the number of customers needing advice has increased. The days of a trained mon-

key being able to make mon- ey as a mortgage broker have gone and being a mainstream junkie is going to produce ever diminishing returns. The broker of the future is far more likely to be placing deals with a specialist lender or a private bank and will be the choice of millions of peo- ple who have become unwit- ting mortgage prisoners. The prognosis for those brokers who continue to focus exclu- sively on prime mortgages is not great but those brokers that recognise the changes ahead are likely to find a rich vein of customers.

If it’s a limited company, an HMO, a multi-unit block or a customer who already owns a complex portfolio - remember who to choose.